Ask Alexandra: Starting a Luxury Goods Company

Ask Alexandra is my advice column. Have a question you want to ask me? Fill out the form here.

Louis Vuitton advertises the fact that they are a Paris brand, on their labels.

Hi,

I am young entrepreneur who is trying to start a luxury leather goods company (really early stages), but I keep coming up with questions about the luxury goods market. What’s really in a luxury brand? Most of the luxury brands I know are from fashion capitals like London, Milan, Paris or NY. Is the location that relevant? I have a lot of questions since I am new in this field but I would really appreciate your advice. Thanks for your good work, keep at it.

New York is a big part of the DKNY brand (it is in the name) and all the campaigns feature the city as a backdrop.

Hi Arturo,

A very interesting question, thanks for your letter (and sorry for taking so long to respond.) I’d say a luxury goods brand, in its early stages, is all about product. A super high quality product can be considered a luxury product. What makes something high quality? In fashion that could be a number of things, including the materials, the construction technique, whether it is long lasting, the process in which is it sourced/made, or most likely, a combination of all of these things. Hermès, first and foremost, is about product, which is handmade by the best leather craftsman in the world, in the finest of materials. They didn’t build their brand because they had a store in Paris, or because they had fancy models in their campaigns, the essence of their luxury brand is about quality first. Those other things are important, but secondary to product.

(On that note, once you have built a luxury brand, you can then start to sell non-luxury products at high price points. That’s why brand equity and brand value are a large part of the valuation of a fashion company. For example, Calvin Klein underwear isn’t that much better than most men’s cotton underwear brands, but because Calvin Klein is considered a luxury brand, they can sell their underwear for a lot more than less prestigious brands.)

Prada’s Milan heritage is on their labels.

If you have a luxury product, it doesn’t matter if you are in London or Paris or small town USA. Your location starts to matter when your brand grows, but you don’t need to be in a big fashion capital to build a luxury brand (although you normally have to have some kind of presence there for sales and press.) Acne used to show in Stockholm, but a few years back they started to show in London to gain more press exposure (although they are still headquartered in Sweden.) Many Belgium-based brands do shows and sales in Paris, but maintain their Belgium headquarters. A connection to a big fashion city is usually quite important, but you don’t need to be stationed there.

So to answer your second question, no, location does not matter a lot, providing the prestige of having the word “Paris, or “London” after your name is not integral to the brand identity. If you have a luxury product, you can probably start a luxury brand regardless of where you are. You will, however, need to have some sort of presence in the big cities later on, in order to meet with buyers and press.